BLOOMBERG: Kroton Rallies Most on Record Before Student Loan Announcement

Career College Central Summary:

  • Kroton Educacional SA led a rally in Brazilian education companies as investors awaited an announcement on student loans after the government made them harder to get at the end of last year.
  • Shares of the world’s biggest for-profit college operator jumped 14 percent to 10.99 reais at the close of trading in Sao Paulo, its biggest advance on record. Kroton climbed the most on the benchmark Ibovespa gauge, which rose 2.7 percent. Estacio Participacoes SA surged 11 percent to 17.70 reais in the second-best performance on the index.
  • Kroton and Estacio have lost about a third of their market value since Brazil’s Education Ministry said in December that it would raise the minimum grade on the application exam for the loan program known as Fies and increase the time it takes to pay companies to 45 days from 30 days. Education Minister Cid Gomes told reporters on Wednesday discussions were being held with all parties involved and a decision on the changes would be announced today.
  • “There’s that expectation around the Fies announcement, that we could end up getting something a bit more favorable for the companies,” Rafael Ohmachi, an analyst at brokerage firm SLW Corretora, said by phone from Sao Paulo. “We’ve had a lot of volatility in the sector this year with the uncertainties about the program and maybe now we’ll have a solution.”

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